this post was submitted on 06 Oct 2025
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I'd say the problem is that insurance companies can take profits above operating expenses at all. These should all be strictly regulated (if not entirely state-run) and predicated on funds going to reimbursements for expenses + minimal admin overhead. If money is leaking out the window to shareholders via dividends and stock buybacks, its effectively being embezzled from policy holders.
There's an argument for maintaining a reserve (think about disaster prone areas for things like floods, hurricanes, etc...), but I agree that it would be better for insurance organizations to be prohibited from being publicly traded (private or public benefit corporation only)
In a federalized system where you print your own currency, there's really not. Insurance premiums become a deliberate dampener on economic growth that offsets the possibility of future spending (and subsequent inflationary risk) during a large disaster, and an incentive to mitigate risk in order to reduce expenses.
But there's no money in simply holding cash in reserve. That's why private insurance companies typically try to parlay their premiums into investment ROI. The real money in running an insurance company is what you can do with all the cheap cash you've collected while you're sitting on it, with the expectation that you won't need to pay it all out again any time soon.
A public system wouldn't need to hold cash in reserve that it can print/loan itself at ZIRP. And it wouldn't need to seek private ROI ahead of inflation or to pay off private investors in order to mitigate the risk of holding large volumes of cash for a long period of time. But - most importantly - a public insurance program attached to a large state/federal government has a financial incentive to mitigate risk on travel that it can combine with actual public policy to improve the economy overall.
Rather than just insuring a house or a car, state officials can implement public works that reduce the risks of flooding, provide emergency relief during natural disasters to mitigate loss of life, and reduce instances of highway accidents / fatalities. Instead of simply outsourcing and privatizing the risk management aspect to an independent contractor, they can attack the problems of social risk holistically, then set policy prices to reflect the risk-adjusted negative externalities of cleaning up a mess created by risky individual behaviors.
Uhhh, that sounds like socialism
No better way to reduce car accidents than to kill 100 Zillion people.
I don't understand why we don't have nonprofit insurance. It would be cool if someone started one that focused on serving poor people.
In my Canadian province car insurance is government run and if you’re a good driver your premiums and license fees are reduced
Must be nice
It is. I'm in one of those provinces. We get rebate cheques if they take in more cash than outgoing.
We also had an accident where somebody turned into us, but no witness. The insurer of both parties is identical because its the same for everyone, so they did a 50-50 fault and we both get our car fixed with no premium changes
I mean, in my experience that's the point where you put in a call to the local PD and get it reported, so the accident doesn't go on your record. If their car is t-boning your car, its a pretty clear-cut case of them being at-fault.
But if it was minor and folks were in a hurry and nobody cared, I definitely get it. Nice to live in a country that friendly and chill.
Police don't come for accident here, unless it is really major or injury. There's no suing each other or an opposing insurance, so a police report becomes irrelevant.
I though a side dent would show other person at fault, but the insurance company said an alternate way is person is already turning and instead of yielding to traffic in a turn you speed ahead. I felt like arguing it, but since it doesn't matter we just let it be.